President Bush is insisting on massive reforms and new Palestinian leadership as a condition for the creation of a Palestinian state. Mr. Bush spelled out his plan to move the peace process forward in a much-anticipated address delayed by violence in the region.

The president says the people of the Middle East have lived in the midst of death and fear for far too long. He says terrorists want to kill the prospects for peace.

"For the sake of all humanity, things must change in the Middle East," he said.

Mr. Bush says it is possible to provide Israel with security and the Palestinians with a state in three years. But he says before there can be even a provisional state, there must be new Palestinian leaders.

"Peace requires a new and different Palestinian leadership so that a Palestinian state can be born. I call on the Palestinian people to elect new leaders, leaders not compromised by terror," he said.

President Bush says he is not interested in half-efforts, but insists on "true" reform political, legal, constitutional and economic.

"With a dedicated effort this state can rise rapidly as it comes to terms with Israel, Egypt and Jordan on practical issues such as security," he said.

Israeli leaders have scoffed in recent days at the notion of a Palestinian state, provisional or otherwise. Angered by a series of suicide bombings, Israeli Prime Minister Ariel Sharon recently dismissed the idea.

The president says he understands Israel's security concerns. But he says a stable, peaceful Palestinian state is essential to provide the security all Israelis desire.

He says while the Palestinians implement reforms, Israel must take concrete steps to support the emergence of a viable Palestinian state.

"As we make progress towards security, Israeli forces need to withdraw fully to positions they held prior to September 28th, 2000. And consistent with the recommendations of the Mitchell Committee, Israeli settlement activity in the occupied territories must stop.

The president says Secretary of State Colin Powell will work with leaders in the region to implement his plan. He acknowledges there may be setbacks, but stresses with reforms, the peace process can move forward and negotiations can begin on the hardest issues of all such as the borders of a Palestinian state, and the status of Jerusalem.

"This moment is both an opportunity and a test for all parties in the Middle East. It is an opportunity to lay the foundations for future peace and a test to show who is serious about peace," he said.

The Bush proposals are the result of months of consultations with Arab and Israeli leaders. The president was originally expected to unveil his peace framework last week, but delayed the announcement when violence in the region escalated.

Although much anticipated, the speech was delivered on short notice in the White House Rose Garden. It was the same spot where the president delivered a surprise address on April 4 stressing the need for all sides to work for peace and signaling greater U.S. involvement in the process.